Jargon Buster - Definition of Sum Assured

is the amount of cover provided on an insurance policy. This amount is paid out in the event of a valid claim and is usually used in reference to life insurance and critical illness policies.

Some examples are:

For a life insurance policy, the sum assured is paid out as a lump sum or monthly benefit in the event of the death of the insured. This is also applicable for endowments and whole of life policies.

For a critical illness policy, the sum assured is paid out as a lump sum or monthly benefit upon diagnosis of a specified critical illness.

For a home insurance policy, the sum assured represents the maximum that you can claim for either buildings or contents.

With life insurance and critical illness policies, you can often choose to have a decreasing sum assured for a lower monthly premium. This is often referred to as decreasing or mortgage insurance and means that your sum assured will drop each year much like a repayment mortgage.

The Financial Ombudsman Service is available to sort out individual complaints that clients and financial services businesses aren't able to resolve themselves. To contact the Financial Ombudsman Service please visit www.financial-ombudsman.org.uk.